Legal Blog

Legal Fees

You often, indeed almost invariably, see a mortgage commitment in which the mortgagor agrees to pay the mortgagee’s legal fees. In some residential mortgages and in many commercial mortgages, different lawyers represent the mortgagee and the mortgagor. Are there any controls over the amount that the mortgagee’s lawyers can charge? In Plaza Financial Corporation v. National Bank of Canada (2000), 47 O.R. (3d) 641 (C.A.), the mortgagee said no.

What Nerve

Lawyers charged National for their services in a mortgage transaction and National, pursuant to the loan agreement, requested the mortgagor to pay the account. The mortgagor requested a copy of the account. National refused and paid the bill from funds held in the mortgagor’s account. The mortgagor applied to compel National to deliver the account and, after delivery, to have the account assessed. Unfortunately for the mortgagor, it applied after one year from the date of payment.

National ultimately delivered a copy of the account but blocked out portions of the account, claiming solicitor-client privilege.

National claimed that the mortgagor had agreed to pay the account, had authorised its payment by National, and could not show any special circumstances for assessment, as set out in section 11 of the Solicitors Act. The trial judge agreed.

On Appeal

The Court of Appeal wisely dealt with the matter as follows: “The mortgagor was entitled to satisfy itself that the legal fees and expenses which were claimed met the criteria set out in the 1997 agreement. National chose to deny the mortgagor the relevant information and to pay the solicitors’ fees from the mortgagor’s account over the mortgagor’s express objection. Absent an assessment by the mortgagor, there will be no independent review of the fees and no way of knowing whether they are truly covered by the 1997 agreement. In my view, these factors combine to constitute special circumstances within the meaning of section 11 of the Act. This is the case where an assessment should be ordered.” Quite so. The basic unfairness and arrogance of National’s position is astounding.